Ravi Menon: No Place for Private Cryptocurrencies in Monetary System
Ravi Menon, the managing director of the Monetary Authority of Singapore (MAS), has stated that private cryptocurrencies like Bitcoin and Ethereum will not have a place in the future monetary system. According to Menon, these cryptocurrencies fail the “fundamental tests of financial services” because they are unable to maintain value. He added that people only buy and sell these cryptocurrencies for quick profits, rather than using them as a store of value. While Menon did not specify which cryptocurrencies would be barred, he emphasized that the future monetary system will be based on central bank digital currencies (CBDCs), regulated stablecoins, and tokenized bank liabilities.
Singapore’s Focus on CBDCs and Regulated Stablecoins
Menon’s comments align with Singapore’s recent actions targeting stablecoins. The MAS introduced a regulatory framework in mid-November 2023 to enhance the stability of single-currency stablecoins. This framework includes requirements related to value stability, capital, redemption at par, and disclosure of audit results. Only stablecoin issuers who meet these criteria can apply for recognition and designation as “MAS-regulated stablecoins.” Additionally, Singapore’s financial regulator plans to launch a live pilot of a wholesale interbank settlement CBDC in 2024 as part of the Orchid Blueprint developed by the MAS.
Hot Take: Singapore Sets Course for CBDCs and Regulated Stablecoins
Singapore is taking a decisive stance on the future of cryptocurrencies by emphasizing central bank digital currencies (CBDCs) and regulated stablecoins while dismissing private cryptocurrencies like Bitcoin and Ethereum. Ravi Menon, the managing director of the MAS, believes that private cryptocurrencies fail to meet the fundamental tests of financial services due to their inability to maintain value. By introducing a regulatory framework for stablecoins and planning a live pilot of a wholesale interbank settlement CBDC, Singapore is positioning itself as a pioneer in the development of a new monetary system. This approach aims to provide stability and regulation, addressing concerns surrounding value preservation and ensuring the resilience of the financial ecosystem.
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